July NY world sugar #11 (SBN25) today is up +0.18 (+1.09%), and August London ICE white sugar #5 (SWQ25) is up +6.10 (+1.31%).
Sugar prices today are moving higher as strength in crude oil and the Brazilian real has prompted some short covering in sugar futures from last Friday’s multi-year lows. WTI crude oil (CLN25) climbed to a 2-1/4 month high today, which benefits ethanol prices and may prompt the world’s sugar mills to divert more cane crushing toward ethanol production rather than sugar, thus reducing sugar supplies. Also, today’s rally in the Brazilian real (^USDBRL) to an 8-month high discourages export selling from Brazil’s sugar producers.
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Sugar prices have been in a two-month-long downtrend, with NY sugar posting a 4-year nearest-futures low last Friday and London sugar posting a 3-3/4 year low. Expectations for a global sugar surplus are hammering prices. On May 22, the USDA, in its biannual report, projected that global 2025/26 sugar production would increase by +4.7% year-over-year (y/y) to a record 189.318 million metric tons (MMT), with a global sugar surplus of 41.188 MMT, up 7.5% year-over-year.
The outlook for higher sugar production in India, the world’s second-largest producer, is bearish for prices. Last Monday, India’s National Federation of Cooperative Sugar Factories projected India’s 2025/26 sugar production would climb +19% y/y to 35 MMT, citing larger planted cane acreage. The outlook for abundant rainfall in India could lead to a bumper sugar crop, which is bearish for prices. On April 15, India’s Ministry of Earth Sciences projected an above-normal monsoon this year, with total rainfall forecast to be 105% of the long-term average. India’s monsoon season runs from June through September.
Signs of larger global sugar output are negative for prices. On May 22, the USDA’s Foreign Agricultural Service (FAS) predicted that Brazil’s 2025/26 sugar production would rise +2.3% y/y to a record 44.7 MMT. Also, India’s 2025/26 sugar production is projected to rise +25% y/y to 35.3 MMT, citing favorable monsoon rains and increased sugar acreage. In addition, Thailand’s 2025/26 sugar production is expected to climb +2% y/y to 10.3 MMT.
In a bearish factor, the Indian government said on January 20 that it would allow its sugar mills to export 1 MMT of sugar this season, easing the restrictions placed on sugar exports in 2023. India has restricted sugar exports since October 2023 to maintain adequate domestic supplies. India allowed mills to export only 6.1 MMT of sugar during the 2022/23 season to September 30 after allowing exports of a record 11.1 MMT in the previous season. However, the ISMA projects that India’s 2024/25 sugar production will fall -17.5% y/y to a 5-year low of 26.2 MMT. Also, the ISMA reported last Monday that India’s sugar production from Oct 1-May 15 was 25.74 MMT, down -17% from the same period last year. In addition, Indian Food Secretary Chopra said on May 1 that India’s 2024/25 sugar exports may only total 800,000 MT, below earlier expectations of 1 MMT.
The outlook for higher sugar production in Thailand is bearish for sugar prices. On May 2, Thailand’s Office of the Cane and Sugar Board reported that Thailand’s 2024/25 sugar production rose +14% y/y to 10.00 MMT. Thailand is the world’s third-largest sugar producer and the second-largest sugar exporter.
Supporting sugar prices is reduced sugar production in Brazil. On May 29, Unica reported that Brazil’s 2025/26 Center-South sugar production for the first half of May fell -6.8% y/y to 2.408 MMT and that cumulative 2025/26 Brazil Center-South sugar output through mid-May is down by -22.7% y/y to 3.989 MMT.
Meanwhile, the International Sugar Organization (ISO) on May 15 raised its 2024/25 global sugar deficit forecast to a 9-year high of -5.47 MMT from a February forecast of -4.88 MMT, showing a tightening market from the 2023/24 global sugar surplus of 1.31 MMT. The ISO also cut its 2024/25 global sugar production forecast to 174.8 MMT from a February forecast of 175.5 MMT.
Drought and excessive heat last year caused fires in Brazil that damaged sugar crops in Brazil’s top sugar-producing state of Sao Paulo. Green Pool Commodity Specialists noted that as much as 5 MMT of sugar cane may have been lost due to the fires. Last month, Conab, Brazil’s government crop forecasting agency, projected 2024/25 Brazil sugar production to fall -3.4% y/y to 44.118 MMT, citing lower sugarcane yields due to drought and excessive heat.
The USDA, in its bi-annual report released May 22, projected that global 2025/26 sugar production would climb +4.7% y/y to a record 189.318 MMT and that global 2025/26 human sugar consumption would increase +1.4% y/y to a record 177.921 MMT. The USDA also forecasted that 2025/26 global sugar ending stocks would climb +7.5% y/y to 41.188 MMT.
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